Macy’s had recorded a significantly larger than expected fall in its quarterly revenue and cuts in its full-year predictions. The drop comes as a result of a recent decline in department store sales and demand for apparel in the US.
Macy’s same-store revenue dropped by 5.6% in its first quarter, as net sales fell 7.4% to $5.77bn. This was much lower the analysts’ average prediction of $5.93bn according to Thomson Reuters.
The department store chain’s suffering results highlight a falling consumer confidence in the retail climate, especially for apparel and accessories noted Deutsche Bank analyst Paul Trussell.
Fashion sales were also affected by unseasonal weather at the end of March and in April, diverting shoppers from the new spring collections.
In order to prevent further profit decline, Macy’s had said it will cut costs on loss-making stores.
“They need to find a way to bring the shopper in the store, to have product that’s emotionally exciting to the consumer, differentiated product that’s not available elsewhere,” said Stifel, Nicolaus & Co Analyst Richard Jaffe.
Jaffe continued to note that while 40% of Macy’s products are exclusive to the brand, the rest is widely available at its competitors for lower prices. The retailer is aware of this downfall and has said that it will be introducing more exclusive merchandise, including a clothing and accessory line by Lady Gaga and Elton John.
While these changes will benefit the retailer in the long-term, Macy’s does not expect a quick turnaround in this quarter.